After GT Advanced Technologies, Where Do Solar Shorts Go?
Short sellers jumped out of GT Advanced Technologies after shares tanked following the recent surprise bankruptcy announcement. Among the leading U.S. solar-related stocks, where else might they have gone in the first two weeks of October?
Short interest in First Solar, Inc. (NASDAQ: FLSR) and SolarCity Corp (NASDAQ: SCTY) rose by double-digit percentages between the September 30 and October 15 settlement dates. The number of shares short in Sunedison Inc (NYSE: SUNE) grew more modestly during the two-week period, and Vivint Solar had its first short interest reading since its recent initial public offering.
Advanced Energy Industries and SunPower saw their short interest dwindle somewhat, while in Real Goods Solar it was essentially the same at the beginning and the end of the period.
Furthermore, the number of U.S.-listed shares (or ADSs) sold short of foreign-based companies Canadian Solar, China Sunergy, JA Solar Holdings, JinkoSolar, ReneSola and Yingli Green Energy swelled in the period, while short interest in Hanwha SolarOne and Trina Solar shrank.
Below is a quick look at how First Solar, SolarCity and SunEdison have fared recently and what analysts expect from them.
Short interest in this Tempe, Arizona-based company grew about 10 percent, reversing two periods of decline to land on 9.03 million on October 15. The number of shares sold short represents more than 12 percent of the float. However, the days to cover dropped from more than four to less than three.
The sell-off in First Solar shares that began in September continued well into the most recent short interest period. The company has a market capitalization of less than $6 billion. Note that the return on equity is less than 10 percent, but the operating margin is better than the industry average.
The consensus recommendation of the analysts polled by Thomson/First Call is to hold First Solar shares, but it has more buy recommendations now than three months ago. The analysts' mean price target, or where they expect the share price to go, is more than 15 percent higher than the current share price.
The share price fell more than 19 percent during the period, but it has recovered most of that ground since. It is still below the 50-day and 200-day moving averages. The stock has underperformed not only the likes of Linear Technology and Sharp over the past six months, but the S&P 500 as well.
Short interest in this provider of solar energy systems to residential and commercial customers saw a gain of more than 10 percent to around 15.28 million shares. That was the highest number of shares short so far this year, and it represents about 29 percent of the float. The days to cover remained less than three.
During the period, this San Mateo, California-based company said it would offer solar loans to homeowners, and it also announced an agreement with Honda. SolarCity has a market cap of about $5 billion. Note that both the return on equity and the operating margin remain in negative territory.
Eight of the 11 polled analysts recommended buying shares, and none rated the stock at Underperform. A move to the analysts' mean price target would be a whopping 39 percent gain for the shares. That consensus target would also be a new 52-week high.
Short sellers watched the share price retreat about 18 percent during the two-week period but then rise more than 10 percent since then. It is still well below the 50-day and 200-day moving averages, though. The stock may have underperformed the Nasdaq and the S&P 500 in the past six months, but it outperformed smaller competitor RGS Energy.
The number of shares sold short in this Missouri-based company increased about 4 percent in the period to around 65.14 million, or more than 25 percent of the float. That is well more than twice the short interest in the same period of last year. It would take more than five days to close out all of the short positions.
This maker of silicon wafers and solar PV modules is looking to boost its presence in China. SunEdison has a market cap near $5 billion. Here too, the return on equity and operating margin are in the red. Net losses and revenue declines are forecast for the current quarter and for the full year.
All but two of the 15 analysts polled recommend buying SunEdison shares, with four of them rating the stock at Strong Buy. They see plenty of headroom for shares, as their mean price target indicates around 29 percent potential upside. That consensus target would be a new 52-week high as well.
The share price fell about 20 percent during the period, but it has more than recovered since then, but recently met resistance from the 200-day moving average. Over the past six months, the stock has outperformed Advanced Energy Industries and Analog Devices but underperformed the S&P 500.
At the time of this writing, the author had no position in the mentioned equities.
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